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By Alex Lennane
Donald Trump’s decision to “pause” rules banning bribery abroad will not have much impact, according to one forwarder who has worked hard to stamp out corruption.
On Monday, yet another executive order noted: “The president’s foreign policy authority is inextricably linked with the global economic competitiveness of American companies.
“American national security depends in substantial part on the United States and its companies gaining strategic business advantages whether in critical minerals, deepwater ports, or other key infrastructure or assets.
“But overexpansive and unpredictable Foreign Corrupt Practices Act (FCPA) enforcement against American citizens and businesses — by our own government — for routine business practices in other nations not only wastes limited prosecutorial resources that could be dedicated to preserving American freedoms, but actively harms American economic competitiveness and, therefore, national security.”
In other words, the US is considering supporting corrupt practices which boost American competitiveness.
However, it would be a short-sighted company that decided to get involved.
“This seems unbelievable to me – most companies have already cleaned up their practices,” said Mark Daoud, MD of AMG Logistics in Nigeria, which used its TRACE anti-bribery certification to double its business, finding compliance was the key to attracting big shippers.
“If the FCPA were to be reverted to its previous form, companies would have to answer for their actions during the interim.
“Many companies also operate under EU and UK regulations – if you have a branch there, you’re bound by their laws.
“So, I don’t think it would have much of an impact. The FCPA still permits some facilitation payments.
“The main effect might be on smaller companies trying to push boundaries, but that comes with risk. If the next president changes things again in four years, they could face prosecution. Moreover, once a company has engaged in unethical behavior, it’s hard to reverse that – they’ll need to start fresh.”
“Large companies with a presence in both the EU and UK are subject to multiple laws. The UK Bribery Act is likely the most stringent, which is why, when dealing with clients, we refer to it and comply with its standards.”
The overall cost of bribery is expensive, and inefficient, according to analysis. The mention of deepwater ports in the executive order anticipates infrastructure projects as being one area where corruption might be beneficial to the US. But according to the Global Infrastructure Anti-Corruption Centre, it harms all players involved.
In particular, it can lead to “non-viable projects or projects which are unsuitable for the intended purpose”, such as a project selected primarily as an ample opportunity for large bribes, or misappropriation of funds; waste of project funds when a project is over-designed; or a project which was viable, collapsing under the strain of corruption; or simply increased costs. This would not look good for US businesses.
It can also lead to lower operating profits.
“A defective project may prevent the project from operating, or from operating to full capacity, resulting in reduced revenue.”
And, of course, there is a significant risk of prosecution – if not by the US, then by other authorities.
According to the UN, each year corruption and illicit financial flows cost the global economy $3.6trn.
Some $1trn is paid in bribes each year, while $2.6trn is stolen annually – more than 5% of global GDP. Africa loses between $50bn and $89bn each year to illicit flows.
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